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A Prediction for the Hotel Industry in the Coming Year: The End of the Beginning for OTAs

For far too long, foreign OTA giants (OTA = "Online Travel Agents") have taken large chunks of the margins from Norwegian hotels.
🟠 News
April 4, 2024

First and foremost, a small clarification of terms for the uninitiated: OTAs, or online travel agents, are the third-party actors that facilitate hotel bookings through their sites. These platforms have become a necessary evil for the Norwegian hotel industry over the last ten years. They contribute to increased traffic but also take a substantial cut of the hotels' top line. Hotels typically have to pay between 15 and 25 percent in commission. Equally important is the deprivation of crucial customer data that could build future loyalty to the hotels.

A person in a blue and white sweaterDescription automatically generated
Harald Lundemo at VisBook
Photo: VisBook

Automation and digitalization are some of the most important weapons Norwegian hotels have in the battle against OTA giants. A good example is how several Norwegian hotels have managed to automate digital guest journeys. This year, it becomes even more important to balance this area of focus with human interaction. Automation can only be a competitive advantage when combined with good, old-fashioned hospitality.

To offer an alternative to the OTAs, we, the PMS system VisBook and the loyalty platform Loyall, established an integrated platform in 2022. The platform allows hotels to collect data and build loyalty among guests during the booking phase, in a way that goes beyond what previous solutions have done. The automation enables staff to minimize the time spent on administrative work and instead spend time creating unforgettable hotel experiences.

We see that it's the hotels that succeed in putting loyalty on top of automation and operation that strengthen their competitiveness. It's when guests return to the hotel, and the receptionist has insights into the guest's preferred room and sparkling water, that hotels can truly customize the hotel experience. This builds loyalty.  

Recent figures from last year show that our solution has great potential. On average, hotels using the solution manage to convert 20 percent of OTA bookings into direct bookings. These are revenues that directly strengthen the top line – and value creation that remains in Norway.

A person in a suit smilingDescription automatically generated
Martin Kongsvik at Loyall
Photo: Anton Soggiu

Another welcome effect is how the solution makes it easier for hotels to cultivate and reward loyalty among their guests. Through automated invitations to loyalty programs, hotels can further build loyalty. We see that our solution leads to 1 in 3 bookings on average being converted to loyalty members, which has led to additional value creation of 160 Norwegian kroner among our customers since 2023 – revenue that would otherwise have been lost through the OTAs.

Still, it's clear that the industry has a long way to go. Consumer habits are deeply ingrained, and it's unrealistic to imagine a Norwegian hotel industry in the coming years where OTAs don't play a role. Nevertheless, there are good examples of how Norwegian hotels can take up the fight against foreign OTAs – and maybe this is a small indication towards the end of the beginning for these behemoths.

One of the most challenging aspects in the industry is attracting new customers and retaining existing ones. It's only when hotels begin to combine automation and operation with guest loyalty, that we can finally overcome the OTAs."

Since the 1990s, VisBook has helped Norwegian businesses in the travel industry. The company offers an all-in-one platform that integrates all parts of hotel operations. With VisBook, all aspects of the hotel – such as booking, cleaning, spa, restaurant, and accounting – are connected into a user-friendly and scalable system. Today, VisBook assists more than 1000 customers in the Nordics and Europe and holds a leading position within PMS systems.

Founded in 2015 in Norway, Loyall offers an integrated platform for customer loyalty. As a leading player in the Nordics, the company focuses on automated loyalty programs that promote great guest experiences, direct bookings, and increased profitability for businesses. Loyall's solutions are designed to be user-friendly and aim to strengthen the bonds between businesses and their customers.

Check out how Loyall and VisBook are integrated by clicking here.